Pension basics

How much money should I have in my pension?

It’s easy to assume you’ll need a similar income in retirement as during your working life to maintain your lifestyle. However, many people find they spend less when they stop working.
A helpful rule of thumb might be to aim for a budget of around two thirds (67%) of working your salary to enjoy a comfortable lifestyle.

This guideline assumes that you’ll reduce some of your expenses (like your mortgage payments and childcare), so the remaining income is similar to what you’ve been used to living on.

What do other people spend in retirement?

Research by the Pensions and Lifetime Savings Association (PLSA) suggests the following guidelines, although these are likely to increase over time. Please note the figures shown are after tax. Refer to PLSA guidance for the suggested pre-tax income to meet these targets.

 

Retirement Lifestyle Single Couple
Basic £14,400 £22,400
Moderate £31,300 £43,100
Comfortable £43,100 £59,000

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It's important you know

Capital at risk. All investing should be for the longer term. The value of your investments can go up and down, and you may get back less than you invest. Tax treatment depends on individual circumstances and may be subject to change in the future.

A 25% government penalty applies if you withdraw money from a Lifetime ISA for any reason other than buying your first home (up to £450,000) or for retirement, and you may get back less than you paid into your Lifetime ISA.

Your home may be repossessed if you do not keep up repayments on your mortgage.

Payments you make into your pension won’t be accessible until the minimum pension age (currently 55, increasing to age 57 from 2028). Tax treatment depends on individual circumstances and may be subject to change in the future.

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